The renowned US economist who predicted the US housing market crash and the subsequent global financial crisis has set his sights on the Australian economy, and the outlook is a little bleak.

Nouriel 'Dr Doom' Roubini has predicted factors such as the tight federal budget and the slowing of growth in China could see the value of the Australia dollar drop by up to 20 percent.

A new study released by Roubini Global Economics, founded by Dr Roubini, also revealed that Australia's growth could drop below 2 percent next year, Business Day reported.

Dr Roubini also described the housing market boom as 'increasingly out of line' with economic fundamentals such as the unemployment rate and demand for goods and services.

Huge hit: 'Dr Doom' says the Aussie dollar is likely in for a significant drop-off

Economic forecaster correctly predicted the U.S. housing crisis and GFC

The prestigious global forecaster earned his 'Dr Doom' title through consistently making grim predictions for the economic market.

The report suggests the government's decision to tighten the federal budget as poorly timed, and said this may impact on the country's GDP.

Despite the government and other forecasters maintaining the Australian economy is in good shape, this is the bleakest economic report ever to be published on the nation.

In light of China's credit and property market problems, other economists have warned that despite their positive outlook on the economy at home, this could still pose a threat.

'Although some easing of China's credit crunch will help Australian exports in the short run, we see lower Chinese growth in 2015 as a headwind that will weaken Australia's growth and inflation next year, and weigh on growth-orientated assets such as equities and the Australian dollar,' Roubini's local analyst David Nowakowski wrote in the report.

Predictions were also made that interest rates could be slashed by up to 2 percent, which would drive down the Australian dollar.

The Australian dollar is likely to weaken to below US75¢ - a fall of around 20 per cent - on a combination of the lower interest rate differential and slumping GDP growth, with commodity price effects outweighing volumes,' Mr Nowakowski said.

Roubini Global Economics is a renowned global financial forecasting company based in New York, with offices in London and Singapore.